INTRODUCTION

The past decade has witnessed the multiple growths in the volume of international trade and business due to the wave of globalization all over the world. As a result the demand for the international money and financial instruments increased significantly at the global level. In this respect, changes in the interest rates, exchange rates and stock market prices at the different financial markets have increased the financial risk to the corporate world. Adverse changes have even threatened the have increased the financial risks to the corporate world. Adverse changes have even threatened the very survival of the business world. It is therefore to manage such risks; the new financial instruments have been developed in the financial markets, which are also popularly known as financial erivatives. The basic purpose of these instruments is to provide commitments to prices for futures dates for giving protection against adverse movements in future prices, in order to reduce the extent to financial risks. !ot only this, they also provide opportunities to earn profit for those persons who are ready to go for higher risks. In other words, these instruments, indeed, facilitate to transfer the risk from those who wish to avoid it to those who are willing to accept the same. Today, the financial derivatives have become increasingly popular and most commonly used in the world of finance. This has grown with so phenomenal speed all over the world that now it is called as the derivatives revolution. The term " erivative# indicates that it has no independent value; its value is entirely derived from the value of the underlying assets. The underlying asset can be securities, commodities, bullion, currency livestock or anything else. In other worlds, derivative means forward, futures, option or any other hybrid contract of predetermined fixed duration, linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities. The $ecurities contracts %&egulation' Act ()*+ defines "derivative# as under " erivatives# includes

1. $ecurity derived from a debt instrument, share, loan whether secured or

unsecured, risk instrument or contract for differences or any other form of security.

2. A contract which derives its values from the prices. ,r index of prices of
underlying securities. -inancial derivatives is a financial instrument whose value is derived from the value of an underlying asset, hence the name .derivative/ came into existence. There are a variety of such instruments which are extensively trade in the financial markets all over the world, such as forward contracts, futures contracts, call and put options, swaps, etc. A more detailed discussion of the properties of these contracts will be given late part of this lesson. $ince each financial derivative has its own uni0ue features.

Derivatives market in India erivatives products initially emerged as hedging devices against fluctuations in underlying asset. In recent years the market for financial derivatives has grown tremendously in terms of variety of instruments available and it marks by a very high volatility. -utures and options on stock indices have gained more popularity than on individual stocks. Through the use of derivatives products it is possible to partially %or' fully transfer price risks by locking in asset prices. STOCK EXCHANGES IN INDIA: The project is also to study the activities and prospects of stock markets with regarding the !O" The past decade has #een a golden age for stock e$change in India" It is poised to dominant the future of corporate finance in India% thanks to reforms in stock market" &arlier in the initial days of secondary market% trading on 'tock &$changes in India used to take place through open outcry without use of information technology for immediate matching or recording of trades" (ith the advent of technology% the trading in securities is done on)line with the help of *'+T terminals" 'ince ,--.% trading in securities is screen #ased /on)line0 trading which eliminated the need for trading floor" 'ince 1222% internet)#ased trading has also made an appearance in India" The secondary market consists of 13 stock e$changes including the National 'tock &$change and the Over)the)Counter &$change of India /OTC&I0 and inters Connected 'tock &$change of India 4td" The secondary market provides a trading place for the securities that already issued to #e #ought and sold" It also provides li5uidity to the initial #uyers in the primary market to re)offer the securities to any interested #uyer at any price% if mutually accepted" +n active secondary market actually promotes the growth of the primary market and capital formation #ecause investors in the primary market are assured of a continuous market and they can li5uidate their investments in the stock e$change"(ith the emergence of on)line trading in India stock &$changes% the volume of the securities traded% the market

capitali6ation% the si6e of market and the market turnover has increased" The scope of study in on)line trading is very vast" It is important to ensure a smooth workin o! this market" as it is the arena where the p#a$ers in the e%onomi% rowth o! a %ountr$ intera%t& 'arious #aws have (een passed !rom time to time to meet this o()e%tive& The !inan%ia# market in India was hi h#$ se mented unti# the initiation o! re!orms in *++,-+. on a%%ount o! a variet$ o! re u#ations and administered pri%es in%#udin (arriers to entr$& The re!orm pro%ess was initiated with the esta(#ishment o! Se%urities and E/%han e 0oard o! India 1SE0I2& +t present in India 13 stock e$changes duly recogni6ed are given #elow in the order of year of their esta#lishment"

1. 1ombay $tock 2xchange 3 (45* 2. Ahmadabad share and stock brokers association limited 3 3. 6alcutta $tock 2xchange association limited 3 ()*5. 4.
elhi $tock 2xchange 3 ()*5 ()*5.

5. 7adras $tock 2xchange 8()*5 6. Indore $tock brokers association 3 ()*4 7. 1angalore $tock 2xchange 3 ()+9 8. :yderabad $tock 2xchange8 ()+9 9. 6ochin $tock 2xchange8 ()54 10. 11. 12. 13. 14.
;une $tock 2xchange 3 ()4< =.; $tock 2xchange association limited 3 ()4< >udhiana $tock 2xchange association limited 8()49 ?aipur $tock 2xchange association limited 3 ()49 @auhati $tock 2xchange limited 3 ()4A

15. 16. 17. 18. 19. 20. 21. 22. 23.

7angalore $tock 2xchange limited8 ()4* 7agad $tock 2xchange limited, ;atna 3 ()4+ 1huneshwar $tock 2xchange association limited8 ()4) over the counter exchange of India, 1ombay8 ()4) $aurastra Butch $tock 2xchange limited 3 ())C Dadodara $tock 2xchange limited8 ())( 6oimbatore $tock 2xchange limited8 ())( The 7eerut $tock 2xchange limited 3 ())( !ational $tock 2xchange limited 3 ())<

NEED 3O4 THE ST5D6

After going through my study the reader can be very well benefited by not only knowing about $tock 2xchange but also its operation ,various guidelines and by learning the performance on scrips.7y study can make the investor understand various operations done in $tock 2xchange.";erformance 2valuation# makes the reader understand about the performance of the particular scrips since last <months.This gives them a clear idea about the performance of the scrips and how and where to invest.

O07ECTI'ES O3 THE ST5D6

To understand about online Trading in 6apital 7arket segment in !$2,

with reference to !? I! IAI!D2$T ;DT >T .

To study the erivatives Trading in the Indian 6apital 7arket To know the 1usiness growth of -uture and ,ption segment To analysis and interpret the stock fluctuation in share prices of selected
scrips of the stock market

To summarize and to suggest the necessary measures for the better

understanding of !$2 erivative market.

8ETHODO9OG6 O3 THE ST5D6

The study was under taken in the trading floor of !? I! IAI!D2$T ;DT >T . The Information regarding the ,nline trading is collected from both primary as well as secondary sources of data. :rimar$ data Interacting with the operators at the computer terminal/s the clients trading in !? I! IAI!D2$T ;DT >T . Eatching the online trading live. 6ollecting information from the head of each department and from the staff working in those departments. Se%ondar$ data &eferring the topics in textbooks and Fournals relating to stock exchange operations. 6ollecting information through internet and also from !? I! IAI!D2$T ;DT >T 6ollecting the data from the website of !$2.

9I8ITATION' O T7& 'TUD8

As the subFect chosen comparatively new one, the study suffers from certain limitations.

1. $tock 2xchange is an ocean and study is an attempt to understand which a

drop in the ocean. The activities in stock exchange and derivatives market are vast and to understand all the activities is a difficult task, as there are only few persons who can provide information.

2. To know the entire activities of stock exchange is very difficult as it takes

a long period to understand.

3. Though the system, people and time were there, some information regarding
certain topics in stock trading was not collected due to non availability of time to the key persons from their busy schedule. A. 1ecause of the comprehensive nature of some information is not disclosed though sources of information are available.

10

INDU'TR8 9RO I4&

HISTO46 O3 STOCK EXCHANGE: The only stock exchanges operating in the 19th century were those of Bombay set up in 1875 and Ahmadabad set up in 189 ! These were organi"ed as #oluntary non profit$making association of brokers to regulate and protect their interests! Before the control on securities trading became central sub%ect under the constitution in 195&' it was a state sub%ect and the Bombay securities contracts (control) Act of 19*5 used to regulate trading in securities! +nder this act' the Bombay stock exchange was recogni"ed in 19*7 and Ahmadabad in 19,7! -uring the war boom' a number of stock exchanges were organi"ed in Bombay' Ahmadabad and other centers' but they were not recogni"ed! .oon after it became a central sub%ect' central legislation was proposed and a committee headed by A!-! /orwala went into the bill for securities regulation! 0n the basis of the committee1s recommendations and public discussion' the securities contracts (regulation) Act became law in 1952! DE3INITION O3 STOCK EXCHANGE "$tock exchange means anybody or indi#iduals whether incorporated or not' constituted for the purpose of assisting' regulating or controlling the business of buying' selling or dealing in securities3! 4t is an association of member brokers for the purpose of self$regulation and protecting the interests of its members! 4t can operate only if it is recogni"ed by the /o#ernment under the securities contracts (regulation) Act' 1952! The recognition is granted under section , of the Act by the central go#ernment' 5inistry of 6inance! B78A9. Besides the abo#e act' the securities contracts (regulation) rules were also made in 1975 to regulati#e certain matters of trading on the stock exchanges! There are also bylaws of the exchanges' which are concerned with the following sub%ects! 0pening : closing of the stock exchanges' timing of trading' regulation of blank transfers' regulation of Badla or carryo#er business' control of the settlement and other acti#ities of the stock exchange' fixating of margin' fixation of market prices or making up prices' regulation of tara#ani business (%obbing)' etc!' regulation

11

of brokers trading' brokerage chargers' trading rules on the exchange' arbitrage and settlement of disputes' settlement and clearing of the trading etc! 4EG59ATION O3 STOCK EXCHANGES The securities contracts %regulation' act is the basis for operations of the stock exchanges in India. !o exchange can operate legally without the government permission or recognition. $tock exchanges are given monopoly in certain areas under section () of the above Act to ensure that the control and regulation are facilitated. &ecognition can be granted to a stock exchange provided certain conditions are satisfied and the necessary information is supplied to the government. &ecognition can also be withdrawn, if necessary. Ehere there are no stock exchanges, the government licenses some of the brokers to perform the functions of a stock exchange in its absence. SEC54ITIES AND EXCHANGE 0OA4D O3 INDIA 1SE0I2& .;B4 was set up as an autonomous regulatory authority by the go#ernment of 4ndia in 1988 <to protect the interests of in#estors in securities and to promote the de#elopment of' and to regulate the securities market and for matter connected therewith or incidental thereto3! 4t is empowered by two acts namely the .;B4 Act' 199* and the securities contract (regulation) Act' 1952 to perform the function of protecting in#estor1s rights and regulating the capital markets! NATIONA9 STOCK EXCHANGE The !$2 was incorporated in !ov, ())< with an e0uity capital of &s.<* crs. The international securities consultancy %I$6' of :ong Bong has helped in setting up !$2. I$6 has prepared the detailed business plans and initialization of hardware and software systems. The promotions for !$2 were financial institutions, insurances, companies, banks and $21I capital market ltd, Infrastructure leasing and financial services ltd and stock holding corporationsG ltd. It has been set up to strengthen the move towards professionalization of the capital market as well as provide nationwide securities trading facilities to in#estors! !$2 is not an exchange in the traditional sense where brokers own and manage the exchange. A two tier administrative set up involving a company board and a governing aboard of the exchange is envisaged.

12

!$2 is a national market for shares ;$= bonds, debentures and government securities since infrastructure and trading facilities are provided. NSE-NI3T6: The !$2 on Apr<<, ())+ launched a new e0uity Index. The !$28*C. The new Index which replaces the existing !$28(CC Index is expected to serve as an appropriate Index for the new segment of future and option. <=46T73 mean =ational 4ndex for fifty stocks! The =.;$5& comprises fifty companies that represent *& board industry groups with an aggregate market capitali"ation of around >s 1' 7&'&&& crs! All companies included in the 4ndex ha#e a market capitali"ation in excess of >s! 5&& crs each and should ha#e trade for 85? of trading days at an impact cost of less than 1!5?! The base period for the index is the close of price on =o# , 1995' which makes one year of completion of operation of =.;1s capital market segment! The base #alue of the index has been set at 1&&&! NSE-8IDCA: INDEX: =.; madcap index or the %unior nifty comprises 5& stocks that represent *1 board industry groups and will pro#ide proper representation of the 7idcap segment of the Indian capital market. All stocks in the Index should have market capitalization of more than &s.<CC crs and should have traded 4*H of the trading days at an impact cost of less than <.*H.The base period for the index is !ov A ())+, which signifies < years for completion of operations of the capital market segment of the operations. The base value of the Index has been set at (CCC. Average daily turnover of the present scenario *58*1* (8aces) and number of a#erage daily trades *12&(8aces)! At present there are * stock exchanges recogni"ed under the securities contract (regulation Act' 1952)!

13

4EGIONA9 STOCK EXCHANGES 14SE2 O3 INDIA: The &egional $tock 2xchanges in India started spreading its business operation from (4)A. The first &$2 to start its functioning in India was Ahmadabad $tock 2xchange %A$2' followed by 6alcutta $tock 2xchange %6$2' in ()C4. 6atalog of &egional $tock 2xchanges in India

Ahmadabad .tock ;xchange Bangalore .tock ;xchange 1hubaneswar .tock ;xchange @alcutta .tock ;xchange 6ochin $tock 2xchange 6oimbatore $tock 2xchange elhi $tock 2xchange @uwahati $tock 2xchange :yderabad $tock 2xchange ?aipur $tock 2xchange >udhiana $tock 2xchange 7adhya ;radesh $tock 2xchange 7adras $tock 2xchange 7agadha .tock ;xchange 5angalore .tock ;xchange 5eerut .tock ;xchange 0T@ ;xchange 0f 4ndia Aune .tock ;xchange .aurashtra Butch .tock ;xchange +ttar Aradesh .tock ;xchange Cadodara .tock ;xchange

S;OT ana#$sis of Industry:

.trength' 9eakness' 0pportunity' and Threats (.90T) of 4ndian stock market is gi#en below!

14

Stren thD 1! the first and for most thing of strength of 4ndian stock market is its

ability to pro#ide high return! . <. $21I a regulatory body of Indian stock market who protects the interest of the investors.
,! 8arge number of securities which pro#ides medium for in#estment! ! 8arge number of Brokers who plays a role of facilitator for in#estment! (eaknessD 1! The weak point of 4ndian stock market is its #olatility i!e! Eigh risk! *! 4t is a kind of gambling where no guarantee of return and some time it depends on luck OpportunityD 1! .tock market pro#ides an opportunity to money lender and money seeker to in#ester! *! 4t pro#ides an opportunity to the in#estor to be the owner of the company ! ,! .tock market is a kind of indicator of the economic growth of the country where it pro#ides an opportunity to gain according to the inflation of the country or more than that! ThreatsD 1! there are many competitors of stock market such as post office sa#ings' public pro#ident fund' company fixed deposits' fixed deposits with bank etc! which pro#ides fixed and assured returns! also!

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CO8:AN6 :4O3I9E
N7 INDIA IN'EST :'T9TD

Introduction
oing the GrightG thing is a virtue most desirable. The difference between success and failure is often, not dictated by knowledge or expertise, but by its actual application and perseverance. Ehen it comes to successful wealth creation for customers, it is something that we believe in I practice. -or us it is more than a mission; it is what defines our lives and our actions at !? IndiaInvest. Eith this passion, we continue to evolve and make the right product accessions and service innovations in our offerings. To the advisors, we offer a 9+CJ comprehensive business platform with unmatched IT solutions, empowering them to set the best practice standards and deliver real value to their customers. ,ver the years, our passion has seen us grow from strength to strength and expand rapidly, setting new benchmarks in the process. 1ut to us, what really matters the most is the number of lives we have managed to transform and we still have a long way to go... Today !? IndiaInvest ;vt. >td. is one of the leading advisors and distributors of financial products and services in India. 2stablished in year ())A, !? has over a decade of rich exposure in financial investments space and portfolio advisory services. -rom a humble beginning, !?, over the years has evolved out to be a professionally managed, 0uality conscious and customer focussed financial K investment advisory I distribution firm. Ee are head0uartered in $urat, India, and have more than I!& (C,CCC 6rore plus of mutual fund assets under advice, with a wide presence at over (CA locations in <( states in India. The numbers are reflections of the trust, commitment and value that !? shares with (( >ac plus customer base with over (ACCCL Advisors. !? prides in being a professionally managed, 0uality focused and customer centric organisation. The strength of !? lies in the strong domain knowledge in investment consultancy and the delivery of sustainable value to clients with support from cutting8 edge technology platform, developed in8house by !?. At !?, we believe in.. :aving single window, multiple solutions that are integrated for simplicity and sapience 7aking innovations, accessions, value8additions, a constant process ;roviding customers with solutions for tomorrow which will keep them above the curve, today Technology has traditionally been !?Gs key strength. ,ur offering on the technological front is unmatched, vibrant, and comprehensive in nature. ,ur focus I commitment on technology can be gauged from the fact that we have set8up distinct entity with a very strong, talented work8force for the sole purpose of providing the

16

best to !? in terms of technology and support. -inlogic Technologies %India' ;vt. >td. does all the development I support work in8house on a continuous basis. It has successfully developed I implemented a powerful support system for the mutual fund distribution business at !? with a provision for integrating the same with other investment products as well as the financial accounting system. Today -inlogic Technologies has more than (CC employees for its IT developement. Our Divisions N7 3und< Network !? -undz !etwork has been playing a pioneering role in India in providing independent advisors K advisory firms with integrated, comprehensive and practical business solutions for ensuring continuous growth I continuity of business. It provides the financial advisors and the institutions that serve them with insights, strategies and tools to help them significantly grow their businesses. :ow do we do itM Thats because we understand how financial I wealth management businesses work and what is needed to manage, monitor and grow the practice... Eith the 9+CJ Advisory platform, !? has managed to successfully transform the business of many advisory K distribution houses, bringing them on e0ual footing or even better than the toughest competitors in the industry in the concerned domain. Eith a vast experience I strong delivery mechanism, we at !? -undz !etwork, help I ensure transformation and the exploitation of the opportunities available. servi%es This is an integrated service model offering solutions for meeting the diverse real8 estate needs of corporates I retail customers in transacting properties. -inding the right property at the right value and the best buyer for a property is the crux of any realty solution. At !? India&ealty we value this critical element of retailing and aim to provide the customer with an integrated service model that not only focuses on him meeting his desired needs but also on enhancing the overall experience of the transaction. The scope of properties embraces both commercial I residential proFects K properties. The integrated value8added services ensure that the solutions are feasible, authentic, secure I profitable. >everaging upon the strengths of the parent company !?, !? India&ealty aims to offer attractive options and operational guidance to satisfactorily realise the customers realty dreams. Today !? &ealty $ervices has tied up with over AC developers with over (*C proFects across India. N7 Guruku# 7aking people benefit from the growing economy is possible by attracting them to participate in 20uity for long term, to make their money work for itself and create wealth. -or this to happen, a huge force of effective -inancial Advisors is needed. Disualizing this need and with a view to bridge the gap, !? IndiaInvest ;vt. >td. has set up !? @urukul to offer different training programs at moderate costs. !? @urukul works to conceive, craft, design, develop and execute effective training modules to energize people with right inputs through different training programmes at

17

modest cost. ;owered by !?Gs experience of over (A years as leaders in financial advisory services, !? @urukul has emerged successful in conducting sizeable number of trainings since inception in April <CC5 and enFoys lineage of efforts put in by !? prior to April C5. !? @urukul seeks to create an enlightened community of .0uality/ financial advisors capable of changing millions of lives across India and even beyondN !? @urukul also seeks to help people become better professionals K business personalities I achieve success in their own endeavours. -or businesses, as a people partner, !? @urukul seeks to groom employees I management so that they deliver upon their expectations I responsibilities, successfully. !? @urukul is authorised to give training for 6ertified -inancial ;lanner %6-;' by -1$1 India. Today !? @urukul has offered over (<CC training programmes with over <CCCC candidates.

8ana ement
The management at !? brings together a team of people with wide experience and knowledge in the financial services domain. The management provides direction and guidance to the whole organisation. It has strong visions for !? as a globally respected company providing comprehensive services in financial sector. The .6ustomer -irst/ philosophy is deeply ingrained in the management at !?. The aim of the management is to bring the best to the customers in terms of &ange of products and services offered Ouality 6ustomer $ervice All the key members of the organisation put in great focus on the processes I systems under diverse functions of business. The management also focuses on utilizing technology as the key enabler for all the activities and to leverage technology for enhancing overall customer experience. The ke$ mem(ers of the management areP

18

8ana ement 7r. !eeraF 6hoksi 7r. ?ignesh esai ?t 7anaging irector ?t 7anaging irector

Sa#es Team: 7r. 7isbah 1axamusa 7r. 7anish @adhvi 7r. ;rashant Bakkad 7r. $arfaraz ;atel 7r. Tushar 1haFantri 7r. :usaini Banchwala 7r. ?igesh esai !ational :ead Qonal $ales :ead Qonal $ales :ead Qonal $ales :ead Qonal $ales :ead ;roduct :ead 3 Investments ;roduct :ead 3 &ealty

E/e%utive Team: !ame 7r. ?anak ;atel 7r. 7ohammadali $aiyed 7r. haval esai 7r. &akesh Tokarkar 7r. $amanvay 7aniar 7r. Dinayak &aFput 7r. Diral $hah 7r. $hirish ;atel 7r. Abhishek ubey

-unction :ead Audit -inance :uman &esources >egal I 6ompliance 7arketing ,perations &esearch Information Technology $trategic 1usiness evelopment =nit

N7 'a#ues Ehile we constantly look for new ideas and changes that cause positive difference to our clients, we remain true to the values upon which !? India Invest was foundP Hi h-#eve# o! e/pertise: 1eing a growing organisation, we strive to constanlty evolve by providing the highest level of expertise to our client, continuously,

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Inte rit$ = Transparen%$: Ee believe in doing business with a high standard of honesty I integrity. 6reating long term GtrustworthyG relationships with our clients is at the core of our business model. Ee strive to maintain the highest level of transparency and are open to discussions when serving our advsors and investors. :er!orman%e: ,ur drive for performance is distinguished by consistent and meaningful measurement. At !?, we are passionate about our customerGs wealth creation. The enitre !? team exudes confidence and spreads positive vibes around. Team !? is well inclined towards its roles I responsibilities and is eager to learn to serve the customer better. Ee believe in continuous enhancement and growth of our human capital and people at !? start each day afresh with an eagerness to learn and a passion to win. Stron re#ationships $trong relationships grounded in trust and mutual respect over the long8term allow us to successfully serve clients through the various phases of their lives. Comprehensive" a%%urate %ommuni%ations usin #eadin -ed e te%hno#o ies Ee employ new technologies to set industry standards in reporting and client communications. :ro!essiona# ethi%s ,ur top priority is meeting the needs of our clients, and we une0uivocally take full responsibility for the work we do. At !?, we follow a strong process oriented approach in everything we do. Ee are firm believers of "-ollow the process, &esults will 6ome# mantra. Ee have detailed processes related to sales, administration and client servicing, which help us evaluate our performance better and improve upon the shortcomings identified in the system. Strivin E/%e##en%e in Servi%in : There is no substitute to 0uality service and advice. Ee accept this fact at !? through our commitment to 0uality client servicing. Ee work on the latest technologies, solutions and products for our clients to ensure they stay ahead of the competetion and make their business run in 0uick, efficient and the best way. :hi#osoph$ At !?, our $ervice and Investing philosophy inspire and shape the thoughts, beliefs, attitude, actions and decisions of our employees. ,ur philosophy is the spirit which drives our body called !?. Servi%e :hi#osoph$: ,ur primary measure of success is customer satisfaction . Ee are committed to provide our customers with continuous, long8term improvements and value8additions, to meet the needs in an exceptional way. In our efforts to consistently deliver the best service possible to our customers, all employees of !? make every effort toP Think of the customer first, take responsibility, and make prompt service to the customer a priority. eliver upon the commitments I promises made, on time.

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 Anticipate, visualize, understand, meet and exceed our customerGs needs. 1ring energy, passion I excellence in everything we do. 1e honest and ethical, in action I attitude, and keep the customer/s interest. . Investin :hi#osoph$: Ee aim to provide need8based solutions for long8term wealth creation Ee aim to provide all the customers of !?, directly or indirectly, with true, unbiased, need8based solutions and advice that best meet their stated I un8stated needs. In our efforts to provide 0uality financial I investment advice, we believe that . 6lients want need8based solutions, which fits them. >ong8term wealth creation is simple and straight. Asset8Allocation is the ideal I the best way for long8term wealth creation. 2ducating and disclosing all the important facets, which the customer needs to be aware of, is important. The solutions must be unbiased, feasible, practical, executable, measurable and flexible. 6onstant monitoring and proper after8sales service is critical to complete the on8going process. At !?, our aim is to earn the trust and respect of the employees, customers, partners, regulators, industry members and the community at large, by following our service and investing philosophy with commitment. Our servi%e %ommitment The service commitments are to guide the actions of the people at !?. 6learly stated 6ustomers can freely communicate any such action Kevents wherein they feel that any ,f the commitments have been breachedK compromised . At !? we desire to honor ,ur commitments all points of the time and to all our customers without any bias.To provide customer8focused need8based valued services. To provide reliable, accurate and timely information. To maintain all records in privacy. To optimize servicesKbenefits at least Fustifiable cost. To develop and grow the customers business. To provide constructive after sales service. To honor our service commitments. As !? Eealth at all times. Advisor/s @lobal ;rivate 6lient, you get comprehensive set

of services that ensure you stay informed, insightful, in command, of your investments

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N) on#ine ;ea#th A%%ount %overs a#most a## the investment avenues that $ou ma$ have: 7utual -unds 3 All A76s, All $chemes irect 20uity >ife Insurance ;hysical Assets 3 @old and ;roperty ;rivate 20uity 3 1usiness ebt ;roducts 1ank eposits and 6ompany eposits &1I K Infrastructure 1onds ;ostal $avings 3 BD;, 7I$, !$6 ebentures

22

$mall $avings 3 ;;-, !$$

Sa#es = Deve#opment Support $ales and development support form an integral part at !?. 2ach !? -undz !etwork ;artner has a dedicated relationship executive and Kor a relationship 7anager. !ormally the team at !? would help you with N ?oint 6alls to your clients. ;resentations at your 6lient 7eets. ,rganising $ales 7eets, -airs and Eorkshops. 1usiness sales planning and personal business targets. The active support from the sales team from N7 has helped transform the helping you achieve your

businesses of many ;artners working with us.

TECHNO9OG6 S5::O4T Technology is the biggest differentiator. Technology has been and is our ke$ stren th. Ehat we offer on the technological front is uni0ue and comprehensive. ,ur focus can be gauged from the fact that we have a separate sister concern started for the sole purpose of providing the best support to !? in terms of technology. :igh infrastructural spending is done to improve I strengthen our deliverables on this technological front. 3in#o i% Te%hno#o ies 1India2 :vt& 9td&does all the development work in8house on a continuous basis through its team of talented professionals. All the tools, services, products, etc offered by N7 has been deve#oped in-house according to what we feel.

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1ut technology by itself cannot make a difference. ,nly when technology is combined with strong domain knowledge and understanding of customer needs, can it truly help make a significant difference. And this is what N7 has achieved and aims to continue doing so. Rour Total Technology $olution Eebsite creation and 7anagement. ,n8line Automatic Investment Accounts to all clients. 6entralised ,nline Automatic Advisor Account %;artners for 7anagement, 7I$, ;ortfolio Access, etc . 7arketing, $ales and other support through application of technology. CO885NICATIONS: ,ngoing communications play a very important part in keeping in touch with you clients, having a goodwill and loyalty or simply as part of your service offering. !? -undz truly realizes the importance of such communications. The &esearch and the 7arketing teams at !? offer many communications of use to you. =nder !? Bnowledge 2dge seriesN ,bFectiveP To keep everyone updated and well informed aily 7arket =pdate 3 A roundup of market, forex, economic news. aily 7utual -und Tracker 3 A daily of 7- schemes. Eeekly ;erformance &eport 3 A weekly review of all the 7schemes as per sub8types. 7onthly -und -act $heet 3 A monthly publication , =pdates, etc of important changes, events. ebt performance review esk'

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=nder !? I8@urukul seriesN,bFectiveP To make the difference between information I wisdom. Articles on InvestmentsK2conomyK-inance, etc Training to employees and associates and also to investors .&egular market analysis, stories N7 Advanta e An Advisor working as !? -undz !etwork ;artner enFoys many privileges and 6heck list that differentiates !? -undz !etwork ;artner from the crowd. Superior C#ient Servi%e ,n line personal investment Account to 6lients Ouality 6omprehensive, insightful &eports to clients Automatic 6apturing of 7- Transaction ,n line Ouery management module for 0ueries $uperior and 6omprehensive product offerings 6omprehensive 2mail $ubscriptions E!!e%tive 8arketin and Sa#es Support Eeb 1rand presence with your #own website# 6omplete access to clients/ accounts 6omprehensive 7arketing $upport 6omprehensive $ales $upport &egular 2vents, $eminars and meets Res Res Res Res Res Res Res Res Res

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,n8going planning and management guidance N73EAT54ES 5ni>ue

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This product is uni0ue, one of its kind, in the industry combining all different investment assets and products into a single automatic on8line account. The scope of assets covered, structure and the extent K 0uality of reports makes it a winner throughout. Assets Covered The Assets covered areP All 7utual -und $chemes %routed through you', 20uity and -ixed Income Instruments with include 8 1ank eposits, 1onds, ebentures, ;;-, ebentures, !$$, ;ostal $avings, etc On-#ine Automati% The account is available online 8 any time anywhere to your clients. Eealth nest reflects the Greal valueG of your investments, especially mutual funds and direct e0uities, where the values are updated on a daily basis. -urther all mutual fund transactions of your clients routed through you will only be automatically displayed, creating a preference for your service and a barrier for your competitors to break. irect

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DE4I'ATI'ES
The emergence of the market for deri#ati#es products' most notably forwards' futures and options' can be traced back to the willingness of risk$a#erse economic agents to guard themsel#es against uncertainties arising out of fluctuations in asset prices! By their #ery nature' the financial markets are marked by a #ery high degree of #olatility! Through the use of deri#ati#e products' it is possible to partially or fully transfer price risks by locking$in asset prices! As instruments of risk management' these generally do not influence the fluctuations in the underlying asset prices! Eowe#er' by locking$in asset prices' deri#ati#e product

27

7inimizes the impact of fluctuations in asset prices on the profitability and cash flow situation of risk$a#erse in#estors! -eri#ati#es are risk management instruments' which deri#e their #alue from an underlying asset! The underlying asset can be bullion' index' share' bonds' currency' interest' etc!!! Banks' .ecurities firms' companies and in#estors to hedge risks' to gain access to cheaper money and to make profit' use deri#ati#es! -eri#ati#es are likely to grow e#en at a faster rate in future! DE3INITION -eri#ati#e is a product whose #alue is deri#ed from the #alue of an underlying asset in a contractual manner! The underlying asset can be eFuity' forex' commodity or any other asset! (' other form of security! .ecurities @ontracts (>egulation) Act' 1952 (.@> Act) defines <deri#ati#e3 to secured or unsecured' risk instrument or contract for differences or any

2)

A contract which derives its value from the prices, or index of prices, of underlying securities. Emer en%e o! !inan%ia# derivative produ%ts: erivative products initially emerged as hedging de#ices against

fluctuations in commodity prices' and commodity$linked deri#ati#es remained the sole form of such products for almost three hundred years! 6inancial deri#ati#es came into spotlight in the post$197& period due to growing instability in the financial markets! Eowe#er' since their emergence' these products ha#e become #ery popular and by 199&s' they accounted for about two$thirds of total transactions in deri#ati#e products! 4n recent years' the market for financial deri#ati#es has grown tremendously in terms of #ariety of instruments a#ailable' their complexity and also turno#er! 4n the class of eFuity deri#ati#es the world o#er' futures and options on stock indices ha#e gained more popularity than on indi#idual stocks' especially among institutional in#estors' who are ma%or users of index$linked deri#ati#es! ;#en small in#estors find these useful due to high correlation of the popular indexes with #arious portfolios and ease of use! The lower costs associated with index deri#ati#es #isGaG#is deri#ati#e products based on indi#idual securities is another reason for their growing use! :A4TICI:ANTS: The following three broad categories of participants in the derivatives market.

28

HEDGE4S: :edgers face risk associated with the price of an asset. They use futures or options markets to reduce or eliminate this risk. S:EC59ATO4S: $peculators wish to bet on future movements in the price of an asset. -utures and options contracts can give them an extra leverage; that is, they can increase both the potential gains and potential losses in a speculative venture. A40IT4AGE4S: Arbitrageurs are in business to take of a discrepancy between prices in two different markets, if, for, example, they see the futures price of an asset getting out of line with the cash price, they will take offsetting position in the two markets to lock in a profit. 35NCTIONS O3 DE4I'ATI'E 8A4KETS: The following are the various functions that are performed by the derivatives markets. They areP

level.

;rices in an organized derivatives market reflect the perception of market participants about the future and lead the price of underlying to the perceived future

erivatives market helps to transfer risks from those who have them but may not like them to those who have an appetite for them. erivatives trading acts as a catalyst for new entrepreneurial activity. erivatives markets help increase saving and investment in long run.

T6:ES O3 DE4I'ATI'ES

29

The following are the various types of derivatives. They areP 3O4;A4DS: A forward contract is a customi"ed contract between two entities' where settlement takes place on a specific date in the future at today1s pre$agreed price! 35T54ES: A futures contract is an agreement between two parties to buy or sell an asset in a certain time at a certain price; they are standardized and traded on exchange. O:TIONS: ,ptions are of two types8calls and puts. 6alls give the buyer the right but not the obligation to buy a given 0uantity of the underlying asset, at a given price on or before a given future date. ;uts give the buyer the right, but not the obligation to sell a given 0uantity of the underlying asset at a given price on or before a given date. ;A44ANTS: ,ptions generally have lives of up to one year; the maFority of options traded on options exchanges having a maximum maturity of nine months. >onger8dated options are called warrants and are generally traded over8the counter. 9EA:S: The acronym >2A;$ means long8term 20uity Anticipation securities. These are options having a maturity of up to three years. 0ASKETSD Basket options are options on portfolios of underlying assets! The underlying asset is usually a mo#ing a#erage of a basket of assets! ;Fuity index options are a form of basket options!

S;A:S: $waps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula! They can be regarded as portfolios of forward contracts! The two commonly used .waps areD a2 Interest rate Swaps:

30

These entail swapping only the related cash flows between the parties in the same currency. (2 Curren%$ Swaps: These entail swapping both principal and interest between the parties, with the cash flows in on direction being in a different currency than those in the opposite direction. S;A:TION: .waptions are options to buy or sell a swap that will become operati#e at the expiry of the options! Thus a swaption is an option on a forward swap! 4ATIONA9E 0EHIND THE DE'E9O:8ENT O3 DE4I'ATI'ES: Eolding portfolios of securities is associated with the risk of the possibility that the in#estor may reali"e his returns' which would be much lesser than what he expected to get! There are #arious factors' which affect the returnsD (. Arice or di#idend (interest) <. .ome are internal to the firm like$ 9. 4ndustrial policy A. 5anagement capabilities *. @onsumer1s preference

6. >abor strike' etc!

These forces are to a large extent controllable and are termed as non systematic risks! An in#estor can easily manage such non$systematic by ha#ing a well$di#ersified portfolio spread across the companies' industries and groups so that a loss in one may easily be compensated with a gain in other! There are yet other of influence which are external to the firm' cannot be controlled and affect large number of securities! They are termed as systematic risk! They areD 1! ;conomic *! Aolitical ,! .ociological changes are sources of systematic risk! 6or instance' inflation' interest rate' etc! their effect is to cause prices of nearly all$ indi#idual stocks to mo#e together in the same manner! 9e therefore Fuite often find stock prices falling from time to time in spite of company1s earnings rising and #ice #ersa! &ational 1ehind the development of derivatives market is to manage this systematic risk'liFuidity in the sense of being able to buy and sell relati#ely large amounts Fuicklywithout substantial price concession!

31

4n debt market' a large position of the total risk of securities is systematic! -ebt instruments mare also finite life securities with limited marketability due to their small si"e relati#e to many common stocks! Those factors fa#or for the purpose of both portfolio hedging and speculation' the introduction of deri#ati#es securities that is on some broader market rather than an indi#idual security! 4EG59ATO46 34A8E;O4K: The trading of derivatives is governed by the provisions contained in the $6 & A, the $21I Act, and the regulations framed there under the rules and byelaws of stock exchanges. &egulation for erivative TradingP $21I set up a <A member committed under 6hairmanship of r. >. 6. @upta develop the appropriate regulatory framework for derivative trading in India. The committee submitted its report in 7arch ())4. ,n 7ay ((, ())4 $21I accepted the recommendations of the committee and approved the phased introduction of derivatives trading in India beginning with stock index -utures. $21I also approved he "suggestive bye8laws# recommended by the committee for regulation and control of trading and settlement of erivative contract. The provision in the $6& Act governs the trading in the securities. The amendment of the $6& Act to include " 2&IDATID2$# within the ambit of securities in the $6& Act made trading in erivatives possible within the framework of the Act! ;ligibility criteria as prescribed in the 8! @! /upta committee report may apply to .;B4 for grant of recognition under section of the .@> Act' 1952 to start -eri#ati#es Trading! The deri#ati#e exchange:segment should ha#e a separate go#erning council and representation of trading:clearing member shall be limited to maximum &? of the total members of the go#erning council! The exchange shall regulate the sales practices of its members and will obtain appro#al of .;B4 before start of Trading in any deri#ati#e contract! The exchange shall ha#e minimum 5& members! The members of an existing segment of the exchange will not automatically become the members of the deri#ati#es segment! The members of the deri#ati#es segment need to fulfill the eligibility conditions as lay down by the 8! @! /upta committee

.The clearing and settlement of derivatives trades shall be through a $21I approved
clearing corporationKclearing house. 6learing 6orporationK6learing :ouse complying with the eligibility conditions as lay down by the committee ha#e to apply to .;B4 for grant of appro#al!

32

-eri#ati#es broker:dealers and @learing members are reFuired to seek registration from .;B4! The 5inimum contract #alue shall not be less than >s!* 8akh! ;xchange should also submit details of the futures contract they purpose to introduce! The trading members are reFuired to ha#e Fualified appro#ed user and sales persons who ha#e passed a certification programme appro#ed by .;B4

INT4OD5CTION TO 35T54ES AND O:TIONS 4n recent years' deri#ati#es ha#e become increasingly important in the field of finance! 9hile futures and options are now acti#ely traded on many exchanges' forward contracts are popular on the 0T@ market! 4n this chapter we shall study in detail these three deri#ati#e contracts! 3orward %ontra%ts: A forward contract is an agreement to buy or sell an asset on a specified future date for a specified price. ,ne of the parties to the contract assumes a long position and agrees to buy the underlying asset on a certain specified future date for a certain specified price. The other party assumes a short position and agrees to sell the asset on the same date for the same price. ,ther contract details like delivery date, price and 0uantity are negotiated bilaterally by the parties to the contract. The forward contracts are normally traded outside the exchanges. The salient features of forward contracts areP They are bilateral contracts and hence exposed to counter3party risk. 2ach contract is custom designed, and hence is uni0ue in terms of contract size, expiration date and the asset type and 0uality. The contract price is generally not available in public domain. ,n the expiration date, the contract has to be settled by delivery of the asset. If the party wishes to reverse the contract, it has to compulsorily go to the same counterparty, which often results in high prices being charged. :owever forward contracts in certain markets have become very standardized, as in the case of foreign exchange, thereby reducing transaction costs and increasing transactions volume. This process of standardization reaches its limit in the organized futures market. -orward contracts are very useful in hedging and speculation. The classic hedging application would be that of an exporter who expects to receive payment in dollars

33

three months later. :e is exposed to the risk of exchange rate fluctuations. 1y using the currency forward market to sell dollars forward, he can lock on to a rate today and reduce his uncertainty. $imilarly an importer who is re0uired to make a payment in dollars two months hence can reduce his exposure to exchange rate fluctuations by buying dollars forward. If a speculator has information or analysis, which forecasts an upturn in a price, then he can go long on the forward market instead of the cash market. The speculator would go long on the forward, wait for the price to raise' and then take a re#ersing transaction to book profits! .peculators may well be reFuired to deposit a margin upfront! Eowe#er' this is generally a relati#ely small proportion of the #alue of the assets underlying the forward contract! The use of forward markets here supplies le#erage to the speculator! 9imitations o! !orward markets: -orward markets world8wide are afflicted by several problemsP

>ack of centralization of trading, Illi0uidity, and 6ounterparty risk

In the first two of these, the basic problem is that of too much flexibility and generality. The forward market is like a real estate market in that any two consenting adults can form contracts against each other. This often makes them design terms of the deal which are very convenient in that specific situation, but makes the contracts non8tradable. 6ounterparty risk arises from the possibility of default by any one party to the transaction. Ehen one of the two sides to the transaction declares bankruptcy, the other suffers. 2ven when forward markets trade standardized contracts, and hence avoid the problem of illi0uidity, still the counterparty risk remains a very serious

INT4OD5CTION TO 35T54ES: 6utures markets were designed to sol#e the problems that exist in forward markets! A futures contract is an agreement between two parties to buy or sell an

34

asset at a certain time in the future at a certain price! But unlike forward contracts' the futures contracts are standardi"ed and exchange traded! To facilitate liFuidity in the futures contracts' the exchange specifies certain standard features of the contract! 4t is a standardi"ed contract with standard underlying instrument' a standard Fuantity and Fuality of the underlying instrument that can be deli#ered' (or which can be used for reference purposes in settlement) and a standard timing of such settlement! A futures contract may be offset prior to maturity by entering into an eFual and opposite transaction! 5ore than 99? of futures transactions are offset this way! istinction between futures and forwards

-orward contracts are often confused with futures contracts. The confusion is primarily because both serve essentially the same economic functions of allocating risk in the presence of future price uncertainty. :owever futures are a significant improvement over the forward contracts as they eliminate counterparty risk and offer more li0uidity as they are exchange traded. Above table lists the distinction between the two DE3INITIOND A 6utures contract is an agreement between two parties to buy or sell an asset a certain time in the future at a certain price! To facilitate liFuidity in the futures contract' the exchange specifies certain standard features of the contract! standardi"ed items on a futures contract areD Huantity of the underlying Huality of the underlying The date and the month of deli#ery The units of price Fuotations and minimum price change 8ocation of settlement 3EAT54ES O3 35T54ES: The

-utures are highly standardized. The contracting parties need to pay only margin money. :edging of price risks.

35

They have secondary markets to.

T6:ES O3 35T54ES: 0n the basis of the underlying asset they deri#e' the financial futures are di#ided into two typesD .tock futures 4ndex futures :arties in the !utures %ontra%t: There are two parties in a future contract, the buyer and the seller. The buyer of the futures contract is one who is >,!@ on the futures contract and the seller of the futures contract is who is $:,&T on the futures contract. The pay off for the buyer and the seller of the futures of the contracts are as followsP :A6-O33 3O4 A 056E4 O3 35T54ES: ;rofit

-; C -> >oss $< $(

CASE *P8The buyer bought the futures contract at %-'; if the future price goes to $( then the buyer gets the profit of %-;'. CASE ,:-The buyer gets loss when the future price goes less then %-', if the future price goes to $< then the buyer gets the loss of %->'.

36

:A6-O33 3O4 A SE99E4 O3 35T54ES: ;rofit

-> $< -; >oss - 3 -=T=&2$ ;&I62 $(, $< 3 $2TT>272!T ;&I62 $(

CASE *P8 The seller sold the future contract at %-'; if the future goes to $( then the seller gets the profit of %-;'. CASE ,P8 The seller gets loss when the future price goes greater than %-'; if the future price goes to $< then the seller gets the loss of %->'. 8A4GINS: 7argins are the deposits which reduce counter party risk, arise in a futures contract. These margins are collected in order to eliminate the counter party risk. There are three types of marginsP *2 Initia# 8ar ins: Ehenever a futures contract is signed, both buyer and seller are re0uired to post initial margins. 1oth buyer and seller are re0uired to make security deposits that are intended to guarantee that they will in fact be able to fulfill their obligation. These deposits are initial margins. ,2 8arkin to market mar ins: The process of adFusting the e0uity in an investor/s account in order to reflect the change in the settlement price of futures contract is known as 7T7 margin. .2 8aintenan%e mar in: The investor must keep the futures account e0uity e0ual to or greater than certain percentage of the amount deposited as initial margin. If the e0uity goes less than that percentage of

37

initial margin, then the investor receives a call for an additional deposit of cash known as maintenance margin to bring the e0uity up to the initial margin. :4ICING THE 35T54ES: The -air value of the futures contract is derived from a model knows as the cost of carry model. This model gives the fair value of the contract. Cost o! Carr$: -T$ %(Lr80' t Ehere -8 -utures price $8 $pot price of the underlying r8 6ost of financing 08 2xpected ividend yield t 8 :olding ;eriod. 35T54ES TE48INO9OG6: Spot pri%eP The price at which an asset trades in the spot market. 3utures pri%e: The price at which the futures contract trades in the futures market. Contra%t %$%#e: 6ontract cycle is the period over which contract trades. The index futures contracts on the !$2 have one8 month, two 3month and three8month expiry cycle which expire on the last Thursday of the month. Thus a ?anuary expiration contract expires on the last Thursday of ?anuary and a -ebruary expiration contract ceases trading on the last Thursday of -ebruary. ,n the -riday following the last Thursday, a new contract having a three8month expiry is introduced for trading. E/pir$ date: It is the date specifies in the futures contract. This is the last day on which the contract will be traded, at the end of which it will cease to exist. Contra%t si<eP The amount of asset that has to be delivered under one contract. -or instance, the contract size on !$2/s futures market is (CC nifties. 0asis:

38

In the context of financial futures, basis can be defined as the futures price minus the spot price. The will be a different basis for each delivery month for each contract, in a normal market, basis will be positive. This reflects that futures prices normally exceed spot prices. Cost o! %arr$P The relationship between futures prices and spot prices can be summarized in terms of what is known as the cost of carry. This measures the storage cost plus the interest that is paid to finance the asset less the income earned on the asset. Open Interest: ,pen Interest is the total outstanding long or short position in the market at any specific time. As total long positions in the market would be e0ual to short positions, for calculation of open interest, only one side of the contract is counter.

39

INT4OD5CTION TO O:TIONS
DE3INITIONP ,ption is a type of contract between two persons where one grants the other the right to buy a specific asset at a specific price within a specific time period. Alternatively the contract may grant the other person the right to sell a specific asset at a specific price within a specific time period. In order to have this right. The option buyer has to pay the seller of the option premium. The assets on which option can be derived are stocks, commodities, indexes etc. If the underlying asset is the financial asset, then the option are financial option like stock options, currency options, index options etc, and if options like commodity option. :4O:E4TIES O3 O:TION: ,ptions have several uni0ue properties that set them apart from other securities. following are the properties of optionP (. >imited >oss :igh leverages potential >imited >ife 1uyer of the optionP The buyer of an option is one who by paying option premium buys the right but not the obligation to exercise his option on sellerKwriter. <. EriterKseller of the optionP The writer of the call Kput options is the one who receives the option premium and is there by obligated to sellKbuy the asset if the buyer exercises the option on him T6:ES O3 O:TIONS: The options are classified into various types on the basis of various variables. The following are the various types of options. I&On the (asis o! the under#$in asset: ,n the basis of the underlying asset the option are divided in to two typesP INDEX O:TIONS The

:A4TIES IN AN O:TION CONT4ACT:

The index options have the underlying asset as the index. STOCK O:TIONS:

40

A stock option gives the buyer of the option the right to buyKsell stock at a specified price. $tock option are options on the individual stocks, there are currently more than (*C stocks, there are currently more than (*C stocks are trading in the segment. II. On the (asis o! the market movements: ,n the basis of the market movements the option are divided into two types. They areP CA99 O:TION: upwards.

A call option is bought by an investor when he seems that the stock price moves a certain date for a certain price. :5T O:TION:

A call option gives the holder of the option the right but not the obligation to buy an asset by

A put option is bought by an investor when he seems that the stock price moves downwards. A put options gives the holder of the option right but not the obligation to sell an asset by a certain date for a certain price. III&On the (asis o! e/er%ise o! option: ,n the basis of the exercising of the option, the options are classified into two categories. A8E4ICAN O:TION:

American options are options that can be exercised at any time up to the expiration date, all stock options at !$2 are American. E5O4O:EAN O:TION:

2uropean options are options that can be exercised only on the expiration date itself. 2uropean options are easier to analyze than American options. All index options at !$2 are 2uropean. :A6-O33 :4O3I9E 3O4 056E4 O3 A CA99 O:TION: The pay8off of a buyer options depends on a spot price of an underlying asset. The following graph shows the pay8off of buyer of a call option. ;rofit IT7 $& C $; >oss 2< ,T7 AT7 $ 2(

41

$trike price ;remiumK >oss $pot price <

,T7 AT7 IT7 8

8 8

,ut of the money At the money In the money

$; 8 2<8

2( 8 $pot price ( $&8 profit at spot price 2(

CASE *: %$pot price U $trike price' As the spot price %2(' of the underlying asset is more than strike price %$'. The buyer gets profit of %$&', if price increases more than 2( then profit also increase more than $&. CASE ,: %$pot price V $trike price' As a spot price %2<' of the underlying asset is less than strike price %s' The buyer gets loss of %$;'; if price goes down less than 2< then also his loss is limited to his premium %$;' :A6-O33 :4O3I9E 3O4 SE99E4 O3 A CA99 O:TION: The pay8off of seller of the call option depends on the spot price of the underlying asset. The following graph shows the pay8off of seller of a call optionP ;rofit

$& ,T7 2( $; >oss $ 8 $trike price IT7 AT7 ,T7 $& 8 8 8 8 In the money At the money ,ut of the money $; 8 ;remium Kprofit 2( 8 $pot price ( 2< 8 $pot price < IT7 AT7 2<

>oss at spot price 2<

42

CASE *: %$pot price V $trike price' As the spot price %2(' of the underlying is less than strike price %$'. The seller gets the profit of %$;', if the price decreases less than 2( then also profit of the seller does not exceed %$;'. CASE ,: %$pot price U $trike price' As the spot price %2<' of the underlying asset is more than strike price %$' the seller gets loss of %$&', if price goes more than 2< then the loss of the seller also increase more than %$&'. :A6-O33 :4O3I9E 3O4 056E4 O3 A :5T O:TION: The pay8off of the buyer of the option depends on the spot price of the underlying asset. The following graph shows the pay8off of the buyer of a call option. ;rofit ;rofit $; 2( IT7 $& >oss $ AT7 ,T7 2<

$trike price ;remium Kprofit $pot price ( $pot price < ;rofit at spot price 2(

IT7 ,T7

8 8

In the money ,ut of the money At the money

$; 8 2( 8 2< 8 $& 8

AT7 8

CASE *: 1Spot pri%e ? Strike pri%e2 As the spot price %2(' of the underlying asset is less than strike price %$'.the buyer gets the profit %$&', if price decreases less than 2( then profit also increases more than %$&'. CASE ,: 1Spot pri%e @ Strike pri%e2 As the spot price %2<' of the underlying asset is more than strike price %s', the buyer gets loss of %$;', if price goes more than 2< than the loss of the buyer is limited to his premium %$;'

43

:A6-O33 :4O3I9E 3O4 SE99E4 O3 A :5T O:TION: The pay8off of a seller of the option depends on the spot price of the underlying asset. The following graph shows the pay8off of seller of a put optionP ;rofit $; 2( ,T7 $& >oss AT7 $ IT7 2<

$trike price ;remiumK profit $pot price ( $pot price < >oss at spot price 2(

IT7

In the money At the money ,ut of the money

$; 8 2( 8 2< 8 $& 8

AT7 8 ,T7 8

CASE *: 1Spot pri%e ? Strike pri%e2 As the spot price %2(' of the underlying asset is less than strike price %$', the seller gets the loss of %$&', if price decreases less than 2( than the loss also increases more than %$&'. CASE ,: 1Spot pri%e @ Strike pri%e2 As the spot price %2<' of the underlying asset is more than strike price %$', the seller gets profit of %$;', if price goes more than 2< than the profit of seller is limited to his premium %$;'. 3a%tors a!!e%tin the pri%e o! an option: The following are the various factors that affect the price of an option they areP $tock priceP The pay 3off from a call option is an amount by which the stock price exceeds the strike price. 6all options therefore become more valuable as the stock price increases and vice versa. The pay8off from a put option is the amount; by which the strike price exceeds the stock price. ;ut options therefore become more valuable as the stock price increases and vice versa.

44

$trike priceP In case of a call, as a strike price increases, the stock price has to make a larger upward move for the option to go in8the8money. Therefore, for a call, as the strike price increases option becomes less valuable and as strike price decreases, option become more valuable. Time to expirationP 1oth put and call American options become more valuable as a time to expiration increases. DolatilityP The volatility of a stock price is measured of uncertain about future stock price movements. As volatility increases, the chance that the stock will do very well or very poor increases. The value of both calls and puts therefore increase as volatility increase. &isk8free interest rateP The put options prices decline as the risk8free rate increases where as the prices of call always increase as the risk8free interest rate increases. ividendsP ividends have the effect of reducing the stock price on the x8 dividend rate. This has a negative effect on the value of call options and a positive effect on the value of put options. :4ICING O:TIONS: The black8 scholes formula for the price of 2uropean calls and puts on a non8dividend paying stock areP CA99 O:TION: 6 T $! % ('8We8r t ! % <' :5T O:TION ; T We8r t ! %8 <'8$! %8 <' Ehere 6 T DA>=2 ,- 6A>> ,;TI,! $ T $;,T ;&I62 ,- $T,6B !T !,&7A> I$T&I1=TI,! DT D,>ATI>ITR W T $T&IB2 ;&I62 r T A!!=A> &I$B -&22 &2T=&! t T 6,!T&A6T 6R6>2 d( T >n %$KW' L %rL v<K<' t d< T d(8 vXK Options Termino#o $: Strike pri%e: The price specified in the options contract is known as strike price or 2xercise price.

45

Options premium: ,ption premium is the price paid by the option buyer to the option seller. E/piration Date: The date specified in the options contract is known as expiration date. In-the-mone$ option: An In the money option is an option that would lead to positive cash inflow to the holder if it exercised immediately. At-the-mone$ optionP At the money option is an option that would lead to zero cash flow if it is exercised immediately. Out-o!-the-mone$ optionP An out8of8the8money option is an option that would lead to negative cash flow if it is exercised immediately. Intrinsi% va#ue o! mone$P The intrinsic value of an option is IT7, if option is IT7. If the option is ,T7, its intrinsic value is zero. Time va#ue o! an option: The time value of an option is the difference between its premium and its intrinsic value Nature and characteristics of derivatives

Their value is derived from an underlying instrument such as stock index,

currency, etc

They are vehicles for transferring risk. They are leveraged instruments
Importan%e o! derivatives: IndiaGs three8year old futures and options market is the on the verge of fast becoming a haven for retail investors. They are slowly emerging as instruments for mass investment, hedging and speculation. Ehat is noteworthy is that notwithstanding stringent margins, small set of scripts and surveillance and reporting re0uirements still the derivatives volume have surpassed cash market volumes within such a short time. erivatives have a number of advantages such as hassle free settlement, lower transaction cost,

46

flexibility in terms of #arious permutations and combinations of trading strategies etc! 8ana in risk There are several risk inherent in financial transactions or taking only one risk at a time. 3or e/amp#e If we buy a share of we take the following risksD ;rice risk that share may go up or down due to company specific reason %unsystematic risk) Arice risk that share may go up or down due to reasons affecting the sentiments of the whole market (systematic risk)! >i0uidity risk, if our position is very large that we may not be able our position at the pre#ailing price (called impact cost)! @ash out$flow risk that we may not able to arrange the full settlement #alue at the time of deli#ery' resulting in default' auction and subseFuent losses! 0nce in#estor is long on share in#estor can hedge the systematic risk by going shorten share 6utures! 0n the other hand' if in#estors do not want to take unsystematic risk on anyone share' but wish to take only systematic risk $ in#estor can go long on 4ndex 6utures' without buying any indi#idual shares! Spe%u#ationD -eri#ati#es offer an opportunity to make unlimited money by way of speculation! .peculators are of two types! 0ne type is of optimistic #ariety' and sees a rise in prices in future! Ee is known as IbullI! The other type is a pessimist' and he sees a fall in prices' in future! Ee is known as IbearI! They undertake IfuturesI transactions with the intention of making gains through difference in contracted prices and future cash market price prices! 4f' in future' their expectations turn out to be true' they gain and if not they lose! 0f course' they may limit their losses through options! Hi h #evera e: 8e#erage opportunities are often expensi#e and complicated to implement for many in#estor in the cash market are simply not feasible! Eowe#er' 0ptions and 6uture are represent (highly) le#ered in#estments in the underlying cash instruments! erivatives allow you to manage this risk more efficiently by unbundling the risks and allowing either hedging

47

They reFuire only small fraction of the in#estment in the underlying securities! The case is most ob#ious for futures' where there is essentially no initial in#estment except margin payments! Ar(itra e Arbitrageurs profit from price differential existing in two markets by simultaneously operating in two different markets. Arbitrage can be done between two instruments when they are related to each other' but they are temporarily mispriced! 6or example' the futures18 Trading .trategies and Accounting Arocedure of -eri#ati#es Arice and spot price are related by the interest rate' time to maturity and corporate benefit' if any' in the interregnum! Hed in me%hanism -eri#ati#es pro#ide an excellent mechanism to hedge the future price risk! Eedging is a mechanism to reduce price risk inherent in open positions! -eri#ati#es are widely used for hedging! A hedge can help lock in existing profits! 4ts purpose is to reduce the #olatility of a portfolio' by reducing the risk! Eedging is used to protect portfolio #olatility due to! 5arket fluctuation during budget' elections and other political or corporate turmoil! The basic rule in hedging is that the risk of loss in portfolio is offset by the gains in the futures or options! Eence hedging is beneficial! Thus hedging helps to reduce risk by locking returns but does not maximi"e them rather it minimi"es the loss arising out of ad#erse situations! 0ne needs to keep in mind that hedging does not make money but remo#es unwanted risk by reducing the losses! Tradin 5nder#$in 'ersus Tradin Sin #e Sto%k 3utures: The single stock futures market in India has been a great success story across the world. !$2 ranks first in the world in terms of number of contracts traded in single futures. ,ne of the reasons for the success could be the ease of tradi ng and settling these contracts! To trade securities, a customer must open a security trading account with a securities broker and a demat account with a securities depository. 1uying security

48

involves putting up all the money upfront. Eith the purchase of shares of a company, the holder becomes a part owner of the company. The shareholder typically receives the rights and privileges associated with the security, which may include the receipt of dividends, invitation to the annual shareholders meeting and the power to vote. $elling securities involves buying the security before selling it. 2ven in cases where short selling is permitted, it is assumed that the securities broker owns the security and then "lends# it to the trader so that he can sell it. 1esides, even if permitted, short sales on security can only be executed on an up8tick. To trade futures, a customer must open a futures trading account with a derivatives broker. 1uying futures simply involves putting in the margin money. They enable the futures traders to take a position in the underlying security without having to open an account with a securities broker. Eith the purchase of futures on a security, the holder essentially makes a legally binding promise or obligation to buy the underlying security at some point in the future %the expiration date of the contract'. $ecurity futures do not represent ownership in a corporation and the holder is therefore not regarded as a shareholder.

49

05SINESS G4O;TH IN DE4I'ATI'ES SEGE8ENT 34O8 6EA4 ,AAB TO ,A*B 0usiness Growth in Derivatives se ment

Inde/ 3utures

Sto%k 3utures

Inde/ Options Notiona# Turnover 1 No& o! %r&2 %ontra%ts <.42LC4 5()4A5C

Sto%k Options Notiona# Turnover 1 No& o! %ontra%ts (+A+CC< 4 9+A)A95 ( 9<*C49) 9 (AC(+<5 C (9<)*)5 C )A+C+9( *<499(C *<AC55+ *CA*((< **49C5( 9*<9C+< (C95*<) %r&2 AA*5+<.+ )55C9(.( (C9C9AA *C+C+*.< <<)<<+.4 9*)(9+.+ ()95)* (4C<*9 (+449+ <(5<C5 (CC(9( <*(+9

Tota#

Turnover 1 6ear <C(98 (A <C(<8 (9 <C((8 (< <C(C8 (( <CC)8 (C <CC48 C) <CC588 C4 <CC+8 C5 <CC*8 o+ <CCA8 C* <CC98 CA <CC<8 No& o! %r&2 %ontra%ts 9)4+*)) A )+(9A(.A (.A+2LC4 9*55))4 (.+*2LC4 A9*+5** (.542LC4 9)9A94) <.(2LC4 (.*52LC4 4(A45A< A *4*9544 + <(+9*AA ) (5()(++ 4 <(<+5+9 (C<**44 9*5C((( 94<C++5 <*9)*5A (*(95** 55<(A5 **AAA+ A9)*< <(A49

Turnover 1 No& o! %r&2 %ontra%ts A59)5)+ A (<<C5C) (.*42LC4 AC5A+5( (.4+2LC4 *A)*5*5 (.A+2LC4 *()*<A5 <.<<2LC4 9A5)+A< <.CA2LC4 5*A4*+9 (.C*2LC4 4C)C*A) 9 A5CA9C+ + 9<9+44A < (C+5+4A 9 ()*54*+ 949C)+5 <5)(+)5 (A4AC*+ (9C*)9) <4+*99 *(*(*

No& o! %ontra%ts 9.4A2LC4 (.<(2LC) (.C92LC) +.5)2LC4 +.*52LC4 A.<*2LC4 <.(52LC4 (.*42LC4 55C(5(4 * *+44+55 + (+5+4)C ) A()+459

4.+A2LC4 <<5<CC9< +.*(2LC4 (49+*9++ 9.A(2LC4 4C<5)+A <.(<2LC4 **9++C9 4 <*(*5A9 4 (<)9*(( + 9<)9**4 (59<A(A AA<<A( (5*)CC 959(*C< (9+<((( 5)()C+ 994A+) (<()A9 *<4(+ )<A+ 95+*

50

C9 <CC(8 C<

)C*4C

<9+*

)C*4C

05SSINESS G4O;TH IN DE4I'ATI'ES SEG8ENT

I!T2&;&2TATI,!P erivatives Trading on the !$2 commenced with $I; 6!W !ifty Index -utures on (<KC+K<CCA..The Trading in Index ,ptions commenced on AKC+K<CC9.!$2 is the largest erivatives 2xchange in India. Ee trade !ifty in erivatives as -uture Index. There is a facility for small investors in derivatives i.e. ,ptions . ,ptions plays only with premium we have to pay only premium but not full amount. Index is the behavior of market .

51

Data !or 35TIDIX- TATA 8OTO4S NI3T6 3rom ,-8a$-,A*. To .*-8a$-*.

Date Open Close Price Price 02-May295.7 297.35 13 03-May293.95 285.6 13 06-May285 291.05 13 07-May292.55 298.4 13 08-May299.9 300.25 13 09-May301 300.1 13 10-May300.1 309.05 13 11-May308.85 307.55 13 13-May305.65 297.45 13 14-May297.8 300.3 13 15-May302.45 308.85 13 16-May307 303.65 13 17-May301.25 303.35 13 20-May305.6 302.05 13 21-May301.5 292.95 13 22-May296.1 291.15 13 23-May287.3 291.05 13 24-May292.5 288.1 13 27-May286.6 294.5 13

52

28-May13 29-May13 30-May13 31-May13

294 299 315 316.25

295.8 303.8 317.05 313.3

GRAPH For FUTIDX- TATAMOTORS From 02-m !-2013 "o 31- m !-13

53

I#T$RPR$TATIO#%
From "&' (o)' *r +& ,-."! o+', +r-/' " "&' 0" r"-,* o. m ! /o,"r /" -, 295.7. A" "&' m-112' o. "&' mo,"& .3"3r' -,1'4 1'/r' 0'0.53" "&' o+', -,"r'0" +o0-"-o, -,/r' 0'0 .rom "&' m-112' o. "&' mo,"& 6&-/& -,1-/ "'0 +ro.-" " 7-,* o. "r 1'r0 0&or" /o)'r-,* m 7'0 .3"3r' -,1'4 02o62! 1o6,.$,1 o. /o,"r /" "&' ,-."! 1'/r' 0'0 ,1 "&' /2o0' +r-/' 313.3.

DATA !or 35TIDX- ASIAN :AINTS !rom A,-ma$-,A*. to .*-ma$-,A*.

Date 2-may-13 3-may-13 6-may-13 7-may-13 8-may-13 9-may-13 10-may13 11-may13 13-may13 14-may13 15-may13 16-mayOpen Close Price Price 4910 4863.1 4791 4913.6 4854 4815.3 4830 4821.7 4807 4826.05 4810.05 4804.95 4755 4800 4795.25 4752 4848.95 4867 4800 4835.65 4784.95 4773.6 4812.8 4861.5

54

13 17-may13 20-may13 21-may13 22-may13 23-may13 24-may13 27-may13 28-may13 29-may13 30-may13 31-may13

4753 4713 4720.1 4641.1 4667 4870 4939 4890 4705.25 4728 4670

4824.45 4749 4699.5 4716.25 4638.75 4670.95 4853.55 4900 4855.95 4695.25 4727.35

Gr +& .or FUTIDX-ASIA# PAI#TS From 2-m !-2013 "o 31-m !-13

55

INTE4:4ETATION: -rom the above graph of A$IA! ;AI!T$ starts with A+5C and the srip increases by the end of the month the up down market.till end of the contract increases at A4+9.(.

DATA 3or 35TIDX -CI:9A CO8:AN6 3rom A,-ma$-,A*. to .*-ma$-*.

56

Date

Open Close Price Price 02-May407.05 409.05 13 03-May410.95 400.65 13 06-May401 405.05 13 07-May406 408.05 13 08-May409.85 406.05 13 09-May405 400.05 13 10-May397.85 397.55 13 11-May400 401.8 13 13-May400.05 395.05 13 14-May396.25 398.65 13 15-May398.4 411.1 13 16-May411 422.1 13 17-May422 425.6 13 20-May426.95 417.35 13 21-May417.5 418.05 13 22-May419.8 415.7 13 23-May414.85 414.85 13 24-May417 408.5 13 27-May408 401.5 13 28-May399.7 396.3 13 29-May396.5 401.7 13 30-May392 383 13 31-May383.5 370.55 13

57

Gr +& For FUTIDX-8IP9A From 2-m !-2013 "o 31-m !-2013

INTE4:4ETATION: -rom the above graph the !I-TR starts with AC).C* the scrip at the middle of the month increase and decrease due to some globel sales and due to the up and down of the market .Till the end of the month the scrip was decreased at 95C.**.

58

DATA 3or 35TIDX-8:HASIS 3rom B-)un-,A*. to ,-)u#-,A*.

Date 04- !n-13 05- !n-13 06- !n-13 07- !n-13 10- !n-13 11- !n-13 12- !n-13 13- !n-13 14- !n-13 17- !n-13 18- !n-13 19- !n-13 20- !n-13 21- !n-13 24- !n-13 25- !n-13 26- !n-13 27- !n-13 28- !n-13 01- !l-13 02- !l-13

Open Price 478 461.95 464.9 460 439.3 436 421.05 407 384.5 388.35 385.1 394.6 397 389.1 390 375.6 386 375 365 371.95 370.35

Close Price 459.85 463.75 457.15 443.9 435.05 421.7 411.05 386.5 388.15 385.65 391.85 398 391.2 389.85 378.2 383 367.2 363 371.95 370.35 370.6

59

Gr +& For FUTIDX-MPHASIS From 2-m !-2013 "o 2-:32-2013

I#T$RPR$TATIO#%
-rom above graph the 7;:A$I$ starts with A*).4*.The scrip has decreases with effect of some reasons like down the bank shares and competitive intrusion. At the end of the contract it closed 95C.+.

60

DATA 3or :O;E4 G4ID CO4:O4ATION 3rom B-)un-,A*. to ,-)u#-*.

Date 04- !n-13 05- !n-13 06- !n-13 07- !n-13 10- !n-13 11- !n-13 12- !n-13 13- !n-13 14- !n-13 17- !n-13 18- !n-13 19- !n-13 20- !n-13 21- !n-13 24- !n-13 25- !n-13 26- !n-13 27- !n-13 28- !n-13 01- !l-13 02- !l-13

Open Close Price Price 111.2 113.2 112.55 112.45 111.7 112.05 111.05 110.65 111 110 109.35 107.85 108 108 107.25 105.75 106.25 109.1 109.05 108.2 108 108.4 107.95 107.5 107.2 105.85 105.65 107.2 106.6 105.9 106.2 103.1 102.8 106 106.5 106.55 107 111.3 110.5 112.9 112.1 111.35

61

Graph 3or 35TIDX -:O;E4 G4ID !rom AB-)un-,A*. to AB-ma$-,A*.

INTE4:4ETATION: -rom the above graph ;,E2& @&I >T starts with ((9.<.The scrip does

not show much variance. There is no heavy profit or heavy loss due to increase in the @ ;.At the end of the contract closes with a sight increase of (((.9*.

62

ATA for -=TI W86A!A&A 1A!B >td from <8may8(9 to 9(8may8(9

Date

Open Close Price Price 02-May-13 413 412.1 5 03-May-13 409.95 395.4 5 06-May-13 395.5 391.6 07-May-13 391 399.9 5 08-May-13 401 402.9 09-May-13 400 405.7 5 10-May-13 404.25 423.2 5 11-May-13 421 424.4 5 13-May-13 427.8 406.3 14-May-13 406.55 410.4 5 15-May-13 412 429.5 16-May-13 425 434.2 5 17-May-13 432 440.0 5 20-May-13 444 444.4 5 21-May-13 444.45 442.9 22-May-13 443.25 441.6 23-May-13 437.2 424.6 5 24-May-13 423.25 427.4

63

27-May-13 28-May-13 29-May-13 30-May-13 31-May-13

430 430.05 440.95 421.5 424

429.5 5 436.6 422.7 426 412

@raph for -=TI W 36A!A&A 1A!B -rom <8may8(9 to 9(8may8(9

64

"

"#$%&P&%$'$" O#(
-rom the above graph 6A!A&A 1A!B >td starts with A(9.C. The scrip does not show much variance and may be due to the 0uarter results. At the end of the contract closes with a sight increase A(<.C .

SUMMARY
The focus of the study was on ,nline Trading in !? I! IAI!D2$T ;DT >T , Disakhapatnam with an obFective to study and understand the real process of stock trading. The on8line trading in !$2 is done through !ational 2xchange for Automated Trading %!2AT' system. Trading is done in the < types of markets of the !2AT system namely capital market and derivatives market.This system was lacking the information technology for immediate matching or recording of trades. This was time consuming and inefficient. In order to provide efficiency, li0uidity and transparency, !$2%!ational $tock 2xchange' introduced a nation wide online fully automated screen based trading system%$1T$' where a member can punch into the computer Ouantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds matching sell or buy orders from a 6ounter party.!? I! IAI!D2$T ;DT >T , which was set up in !ovember ())*, is a stock broking company. It is a trading member of !$2, 1$2, 76W and !6 2W.

65

In !? I! IAI!D2$T ;DT >T

the futures and options trading systems in !$2

called !2AT 8f I , trading system provides a fully automated screen 8 based trading for !ifty futures 5 options on a national wide basis as well as online monitoring and surveillance mechanism. It supports an order driven market and provides 6omplete transparency of trading operations. It is similar to that of trading of e0uities in the cash market segment.!I-TR is based upon solid economic research it the new world of financial product on the index like index futures, index options and index funds. A trillions calculations were expanded to evolve the rules inside the $I; 6!W !ifty inde In online trading 1ack ,ffice provide the clients with all the trading related services in the post market session.

3INDINGS

(. !? I! IAI!D2$T ;DT >T , Dishakhapatnam trading in !$2, 1$2, 76W, !6W 2W, !$28-W done on same terminals by 6T6>.Trading in !$2 is done through !2AT system in some places. <. !? I! IAI!D2$T ;DT >T , Dishakhapatnam has changed the clients and $ub brokers sharesKsecurities from the paper shares into the electronic shares through demat process. 9. Apart from derivatives trading, demat of securities is also done in the ; block of !? I! IAI!D2$T ;DT >T , Dishakhapatnam through rematerializations process. A. aily market information is collected and up to date enable the investors to invest in profitable shares, all the activities related to derivatives trading on -utures segments. ematerializations and

66

S5GGESTIONS

-or

an

effective

trading

process

!?

I! IAI!D2$T

;DT

>T ,

Dishakhapatnam should provide more and perfect sources of information for the investors or traders. !? I! IAI!D2$T ;DT >T , Dishakhapatnam can increase its business by reaching more potential investors by appointing sales persons and proper advertisements and setting up new branches in potential areas. -or increase customer base the company have to increase various financial products and also the various kinds of portfolio services. Ehen market is going the critical situation the company needs to guide the investor especially in derivatives for reducing the risk towards the investor and company also.

67

CONCLUSION
erivative have existed and evolved over a long time, with roots in commodities market .In the recent years advances in financial markets and technologies have made derivatives easy for the investors. erivatives market in India is growing rapidly unlike e0uity markets Trading in derivatives re0uire more than average understanding of finance. 1eing now markets, 7aximum number of investors have not yet understood thee full implications of the trading in derivatives. $21I should take actions to create awareness in investors about the derivative market. In order to increase the derivatives market in India $21I should revise some of their regulation like contract size, participation of fill in the derivative market. 6ontract size should be minimized because small investor cannot afford this much of huge premiums.

68

erivatives are mostly used for hedging purpose.In derivative market the profit and loss of the option writerKoption holder purel depends on the fluctuations of the underlying.

9IST O3 A004E'IATIONS !$2 A16 176 !$ > !ational $tock 2xchange Additional 1ase 6apital 1ase 7inimum 6apital !ational $ecurities epository >td.

69

6 $> 67 6o. 6A 2A ; ;@ O D; -I -II -I, -T; I,6 I;I$I! >T; 71; 7T7 !$66> ,T6 !2AT !6-7 &1I & 7 $AT $1T$ $6%&' A $6%&' & $21I $@$&, T7

6entral epositories $ervices >td. 6apital febket 6ompany epartment of 6ompany Affairs epartment of 2conomic Affairs epository ;articipant ominant ;romoter @roup isclosed Ouantity elivery versus ;ayment -inancial Institution -oreign Institutional Investors -utures and ,ptions -ile Transfer ;rotocol Immediate or 6ancel Investor ;rotection -und International $ecurities Identification !umber >ast Trade ;rice 7arket by ;rice 7arket to 7arket !ational $ecurities 6learing 6orporation >imited ,ver the 6ounter !ational 2xchange for Automated Trading !$2Gs 6ertification in -inancial 7arkets &eserve 1ank of India &etail ebt 7arkets $ecurities Appellate Tribunal $creen 1ased Trading $ystem $ecurities 6ontracts %&egulation' Act, ()*+ $ecurities 6ontracts %&egulation' &ules, ()*5 $ecurities and 2xchange 1oard of India $ettlement @uarantee -und $elf &egulatory ,rganization Trading 7ember

TL< $econd days from the trading day

70

DA&

Dalue at &isk

0I09IOG4A:H6

71

0ooks: A5THO4S @ordon and !atraFan !6-7 material Eorkbook 7.R.Bhan &. 7ahaFan D.B. 1halla =! I 1radstreet Indian -inancial $ystem -utures I ,ptions Investment management financial risk management 0OOKS -inancial 7arkets and $ervice erivatives 6ore 7odule

Newspapers: 2conomic Times 1usiness line.

;e(sites: www.sebi.gov.in www.nseindia.com www.indiabulls .com www.derivatives.com www.nF india invest.in

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